Short-Term Rental Rules in Tennessee (2024–2025)

Tennessee has no single statewide STR permit, but state law sets the framework, local governments set the rules, and tax obligations are real regardless of which platform you use.

Quick Answer: What Tennessee Law Requires for Short-Term Rentals

The Short-Term Rental Unit Act, enacted as Public Chapter 972 in 2018 via HB 1020 / SB 1086 (110th General Assembly), is the foundation of Tennessee's STR regulatory structure.

You are not a hotel. STRs are explicitly excluded from classification as hotels under the Hotel and Public Swimming Pool Inspection Act (TCA Title 68). This exclusion removes state-level hotel inspection requirements from your property.

You still owe taxes. Tennessee state sales tax at 7% applies to STR gross receipts (TCA Title 67). Local option sales tax, typically ranging from 2.25% to 2.75% depending on the county, stacks on top of that. Many counties and municipalities also impose occupancy-equivalent taxes.

There is no statewide STR permit. Compliance requirements are set entirely at the city and county level. What Nashville requires is different from what Gatlinburg requires, and unincorporated Sevier County has its own rules separate from the city of Gatlinburg.

The 30-day threshold is the trigger. Rentals of fewer than 30 consecutive days are classified as short-term rentals under Tennessee law. Rentals of 30 days or more fall outside the STR framework and are treated as standard residential leases.

Local governments can regulate, but the state authorizes it. Public Chapter 972 grants local governments authority to regulate and tax STRs within their jurisdictions. It does not preempt local rules; it enables them.

Tennessee's Short-Term Rental Unit Act: What the State Statute Actually Says

Public Chapter 972 (2018), codified through amendments to TCA Titles 5, 6, 7, 13, 56, 62, 66, 67, and 68, created the legal category of "short-term rental unit" in Tennessee. Before this act, STRs existed in a regulatory gray zone.

The Statutory Definition

A short-term rental unit is a residential dwelling rented for fewer than 30 consecutive days for compensation. The definition covers single-family homes, condominiums, townhomes, and accessory structures used for that purpose.

The Hotel Carve-Out

The act explicitly states that a short-term rental unit is not a "hotel" under the Hotel and Public Swimming Pool Inspection Act (TCA Title 68). This means the Tennessee Department of Health's hotel inspection program does not apply to STRs. This carve-out does not eliminate all safety obligations. Local fire codes and building codes still apply, and some municipalities have created their own STR-specific inspection programs.

What Local Governments Can Regulate

Under provisions in TCA Title 13 amended by Public Chapter 972, local governments have explicit authority to regulate STRs through:

• Zoning and land use restrictions, including overlay districts
• Local licensing and registration requirements
• Noise, parking, and occupancy limits
• Owner-occupancy requirements
• Permit caps by neighborhood or zone

What Local Governments Cannot Do

The act limits outright bans in areas where residential rentals are otherwise permitted, but the practical scope of this limitation has been contested. Consult the Tennessee Attorney General's office or a Tennessee land use attorney for current case law on municipal ban authority.

Owner-Occupied vs. Non-Owner-Occupied

The distinction between owner-occupied and non-owner-occupied properties is a key factor in local regulations. Owner-occupied STRs, where the host lives on the property, typically face fewer restrictions and lower fees. Non-owner-occupied STRs face stricter scrutiny, higher fees, and are subject to permit caps in most major Tennessee markets.

Local Permit and Registration Requirements: Major Tennessee Cities Compared

Fees and processing timelines below reflect the best available public information. Confirm current figures directly with each jurisdiction before applying, as local ordinances are amended frequently.

Nashville (Metro Davidson County)

Nashville operates under Metro Nashville Code of Ordinances, Chapter 6.140, which created a two-tier permit system. Owner-occupied permits allow the host to rent rooms or the entire property while residing there. Non-owner-occupied permits are subject to neighborhood-level caps, and many Nashville neighborhoods have reached or exceeded those caps. Operating without a Metro Codes permit exposes you to fines and can result in forced delisting. For current fee amounts and cap status at your specific address, contact Metro Nashville Codes Administration directly at 615-862-6590 or check the Metro Codes online portal.

Memphis and Shelby County

Memphis and Shelby County have STR registration requirements. The specific ordinance number and current fee schedule should be verified directly with Shelby County or the City of Memphis. Unincorporated Shelby County areas may have separate requirements from the City of Memphis proper.

Gatlinburg and Sevier County

Sevier County and the City of Gatlinburg both require vacation rental permits and mandate fire safety inspections before a unit can be listed. Specific fire safety requirements include smoke detectors, carbon monoxide detectors, and fire extinguisher placement. Permit fees vary by jurisdiction; contact Sevier County Building and Codes directly for current amounts and the current inspection checklist.

Knoxville

Knoxville uses zoning overlay districts to control where STRs can operate. Some residential zones restrict or prohibit non-owner-occupied STRs. Consult Knoxville City Code zoning provisions and the Knoxville One Stop permitting office before listing.

Taxes Hosts Must Collect and Remit in Tennessee

The State Sales Tax Layer

Tennessee imposes a 7% state sales tax on STR gross receipts under TCA Title 67, which defines accommodations as taxable services. This applies whether you collect payment through a platform or directly from guests.

The Local Option Layer

Local option sales tax, which varies by county and typically ranges from 2.25% to 2.75%, stacks on top of the state rate. The combined rate in most Tennessee counties is between 9.25% and 9.75%. Some municipalities also impose separate hotel or occupancy taxes that apply to STRs, even though STRs are not classified as hotels for inspection purposes.

Marketplace Facilitator Rules

Under Tennessee's marketplace facilitator law, found in TCA Title 67, Airbnb and Vrbo are required to collect and remit Tennessee state sales tax on behalf of hosts for bookings made through their platforms. This covers the 7% state rate. However, local occupancy taxes and some local option taxes may not be fully covered by platform remittance. Verify with the Tennessee Department of Revenue and your specific municipality what remains your direct responsibility.

Registering with the Tennessee Department of Revenue

If you collect any taxes directly, or if you operate outside a marketplace facilitator platform, you must register for a sales tax account through the Tennessee Taxpayer Access Point (TNTAP) at tntap.tn.gov. Consult the Tennessee Department of Revenue's STR tax guidance for the most current bulletin on accommodation taxes.

No Tennessee Income Tax

The Hall Tax, Tennessee's tax on investment income, was fully repealed effective January 1, 2021. Tennessee has no state income tax on wages or rental income. Federal income tax obligations apply normally.

Penalties

Failure to collect and remit taxes results in back-tax liability plus interest. The Tennessee Department of Revenue can assess penalties going back multiple years. If you are unsure about your remittance history, consult a Tennessee tax professional.

What Changed Recently: 2023–2025 Legislative Activity

No new statewide STR-specific legislation has been enacted since Public Chapter 972 in 2018. Local ordinance activity has been the primary regulatory driver.

The HOMES Act of 2024 (HB 2850 / SB 2281, 113th GA)

The Housing Optimization and Market Empowerment Solutions Act was introduced in the 113th General Assembly and would have made broad housing market reforms touching STR-adjacent zoning across TCA Titles 5, 6, 7, 13, 62, 66, 67, and 68. Both the House version (HB 2850) and the Senate version (SB 2281) stalled in committee in spring 2024. As of early in the 114th General Assembly session, the HOMES Act has not been reintroduced. Consult the Tennessee General Assembly bill tracker to confirm current status.

ADU Bills (HB 2031 / SB 2131, 114th GA)

Two bills propose regulation of accessory dwelling units (ADUs), amending TCA Titles 5, 6, 7, 13, 66, and 68. As of the latest updates for the 114th General Assembly (2025-2026 session), both bills were in committee:

• HB 2031 was taken off notice in the Cities and Counties Subcommittee of the State and Local Government Committee.
• SB 2131 was assigned to the General Subcommittee of the Senate State and Local Government Committee.

Neither bill has been signed into law. Monitor the Tennessee General Assembly's 114th session bill tracker for current status.

Why ADU Bills Matter to STR Hosts

Backyard cottages and garage apartments are popular STR property types. If HB 2031 or SB 2131 passes in a form that imposes new owner-occupancy requirements, setback rules, or permitting conditions on ADUs, those requirements would layer on top of existing local STR permit requirements. A host who currently operates a legal ADU as an STR could face new compliance obligations.

Local Enforcement Trends

Nashville's Metro Council has continued to refine its STR ordinance, and permit cap litigation has occurred in Davidson County. Municipalities in high-demand tourist corridors, including Gatlinburg and Pigeon Forge, are moving toward stricter enforcement. If you operate in a tourist-heavy market, assume the regulatory environment will tighten.

Safety, Insurance, and HOA Obligations Tennessee Hosts Often Overlook

Fire Safety

State minimum requirements for residential properties fall under the authority of the State Fire Marshal (TCA Title 68). These include working smoke detectors and, for newer construction, carbon monoxide detectors. Many local jurisdictions, particularly Sevier County and Gatlinburg, impose stricter requirements for vacation rentals, including specific fire extinguisher placement and mandatory pre-rental inspections. Contact the local fire marshal or building and codes office for the jurisdiction-specific checklist.

Liability Insurance

Tennessee does not mandate a minimum liability coverage amount at the state level for STR hosts. However, many local permit programs require proof of general liability insurance, often at $1 million or more per occurrence, as a condition.